21st Century Business Herald:

My question is about restructuring and integration of centrally administered SOEs. In recent years, intense efforts have been made to step up the restructuring and integration of centrally administered SOEs and innovate their forms. Can you introduce the changes of methods in structural adjustments of centrally administered SOEs as well as the features and achievements of the work? Going forward, do you have a preference for reconstructing and rearranging the centrally administered SOEs through professional restructuring or industrial integration? Thank you. 

Zhang Yuzhuo:

Thank you for your interest in restructuring of centrally administered SOEs. I'd like to invite Mr. Weng to answer these questions. 

Weng Jieming:

Thank you for your questions. Market-based strategic restructuring and professional integration is an effective approach to improve the layout and structure of the state-owned sector. Let me give you some data. Since the 18th CPC National Congress, 27 groups of 49 centrally administered SOEs have undergone strategic restructuring and professional integration. A total of 13 centrally administered SOEs have been established by or included under the regulation of the SASAC of the State Council. The number of centrally administered SOEs being monitored was reduced from 116 to 98, which substantially increased the competitiveness, innovative ability, control power, influence and anti-risk capacities of the state-owned economy. 

First, the ability to provide essential energy and resources has been enhanced. For instance, the establishment of enterprises such as China Mineral Resources Group Co. Ltd. and China Rare Earth Group Co. Ltd. has ensured the security of important energy and resources. The reconstruction of Sinochem Group Co. Ltd. and China National Chemical Co. Ltd. as well as the equity cooperation between China Grain Reserves Group Ltd. and COFCO Corporation has guaranteed the national grain supply and the seed industry. 

Second, the efficiency in allocating state-owned assets and resources has been improved. For example, after the inception of China Oil & Gas Piping Network Corporation (PipeChina) , a total of 89,000 kilometers of oil and gas pipelines formerly owned by three major oil and gas enterprises were reorganized, which promoted the social equality of oil and gas piping network infrastructure. Since the establishment of China Tower, the proportion of shared newly built base stations has increased from 14% to over 80%, saving 55,000 mu (3,667 hectares) of land and 176 billion yuan ($25.57 billion) of investment. 

Third, industrial competitiveness has increased. For example, China COSCO Shipping Co. Ltd . integrated from COSCO Group and China Shipping Group topped the world in many aspects including comprehensive shipping capacity and container port throughput. It was also one of the founders of Ocean Alliance , which has extensive influence. The cooperation between Ansteel and Bensteel as well as China Baowu Steel Group 's mergers and acquisitions of Magang (Group) Holding Co., Ltd. , Taiyuan Iron & Steel (Group) , Chongqing Iron & Steel (Group) and Xinyu Iron & Steel (Group) increased the concentration and competitiveness of the industry. Genertec integrated many companies in the machine tool industry and overcame bottlenecks in high-end machine tooling. The integration of resources in sectors like medical care and examination and testing was accelerated. In this way, professional enterprises take charge of specialized businesses, thus enhancing the competitive edge of enterprises. 

Fourth, the layout of emerging industries has been advanced. For example, we established the China Satellite Network Group to enhance development of new telecommunication technologies. The newly founded China Logistics promoted the construction of modern logistics systems. 

Going forward, the SASAC and the centrally administered SOEs will continue focusing on restructuring and integration, and speed up the optimization of layouts and structural adjustment of state-owned assets. We will advance our work by following market-based principles and according to functions and positions of the SOEs. We will focus on building a modernized industrial system as well as the efficient allocation of resources. 

As for your question about the preference for professional integration or industrial integration in our future work, in my view, the two methods are interconnected and reinforce each other, and cannot be separated completely. We will work with both methods so that they can promote each other. On the one hand, we will push forward professional integration of centrally administered SOEs and regional SOEs. By integrating lateral and relevant industries, one enterprise concentrates on one business and each business is run by one enterprise. In doing so, enterprises are more concentrated and we can enhance our intensive management. On the other hand, we will also press ahead with industrial integration. We will promote the development of strategic emerging industries and integrate not only centrally administered SOEs and other SOEs but also enterprises in other fields and under all forms of ownership with market-based equity cooperation. Thus, we will advance the modernization of national industries. Thank you.